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EVs are more expensive than traditional cars

But not by much.
Image: Bloomberg

Last week, I engaged in a thought experiment about the future of the American gas station once electric vehicles take over the road. My conclusion: the big highway rest stop is probably OK, as is the urban fuel oasis; it’s the suburban gas station that may be turning into something else.

That experiment didn’t address how those EVs will actually get on the road, however — that is, who’ll buy them and why?

One way to think about this is to look at auto sales not by powertrain (i.e. what makes it go), or by body design, but by price. When we do that, we see something striking: inexpensive new cars have pretty much vanished in the US In 2012, more than 50% of new vehicles sold were priced below $30 000. Last year, more than 50% of vehicles priced above $40 000.

Now, there is some inflation at work in this price trend, but not that much. Using some basic US Bureau of Labor Statistics math, a $20 000 car in 2012 would cost $22 760 today. That’s an increase of 14% over nine years.

If inflation doesn’t explain this price trend, the logical conclusion is that new car sales are going upscale. That holds for new car leases, too. I picked seven luxury brands and plotted their lease penetration (i.e. the percentage of vehicles that are leased by a company’s finance unit rather than sold outright), as well as each brand’s true market value (i.e. the average price buyers or lessees pay across the brand). I also included four mass-market brands for comparison.

What we see is that all seven luxury brands lease at least 40% of their vehicles, and three lease more than half. They also have true market values between $41 900 and $60 000. Bigger-volume brands, on the other hand, have lower lease penetrations and generally lower true market values (Ford is an exception: very low lease penetration, but also a higher true market value than Audi).

These three market characteristics — the disappearance of the inexpensive new car, the high penetration of leasing for luxury brands, and the high true market value for luxury vehicles — gives me reason to think that EV sales could move quickly.

People still say that EVs are “expensive,” and yes, they do have a higher upfront cost than a comparable conventional car today. But given that half the new car market is priced above $40 000 and more than a quarter is priced above $50 000, the absolute cost is not excluding vehicles from the market.

Last year, an analysis from BloombergNEF found that “upfront cost parity” for US electric and internal combustion vehicles will arrive in 2024. That’s a milestone: in three years, there will be no price difference and no EV sticker shock. EV models might still be relatively expensive, but they won’t be more expensive than a comparable internal combustion engine vehicle.

That timeframe is important for another reason: three years equals one leasing cycle. Anyone leasing a luxury vehicle today will be returning that car to the dealer in 2024 and likely finding that there’s an electric vehicle waiting for them at their accustomed price point. That decision about the next lease won’t require any total cost of ownership math or a sales pitch that says “well, sure you pay a bit more upfront, but your bills are lower!” It just requires a “what do I want?” car-buyer’s decision, an emotional buyer’s connection, and that will be a milestone too.

Nathaniel Bullard is a BloombergNEF analyst who writes the Sparklines newsletter about the global transition to renewable energy.

© 2021 Bloomberg

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Typical Bloomberg propaganda. Watch Michael Moore’s latest documentary “Planet of the humans” and you will see that when it comes to renewable energy, the emperor has no clothes. It is all a farce. Renewables are not cheaper and often use as much carbon in the production and to run like the mirror farms. And Bloomberg is one of the big investors in renewable energy products.

There are still gigantic issues that make EVs an unattractive proposition. The lack of charging stations in countries like SA. The long charging times. Their limited range. The limited life of batteries. The extreme cost of replacing batteries after 6-8 years which kills the resale value of these vehicles.

EVs probably aren’t the future, unless there’s an unexpected breakthrough in battery tech, which doesn’t look likely at present. Hydrogen may be a better long term alternative.

The cost to install and build Hydrogen infrastructure is not economically viable. It is basically the exact copy of how we transport fuel now.

Charging stations are installed for a fraction of the cost, and can be used instantly when connected with electricity.

Charging stations is and will be a problem in SA, but the countries who have it will never go back to petrol stations.

* Long charging times? You can charge a Tesla for 15 minutes and travel 300km (Super charging station).
*Limited range? Tesla model 3 long range: 580km, Tesla Model S Plaid+: 837km range.
Tesla batteries can run a million miles. They have a eight year guarantee, no need to replace the battery after 6-8 years.

The cost of using petrol or diesel over a 8 year period is much much higher.

I want to agree with you and I do believe in “Northern” EV are non negotiable

But heavy haulage…how big is the bank of batteries on a truck tractor pulling 30 tonnes

How many power stations burning carbon (Sun shines 12 hours etc etc)

Toxic metals in batteries when a vehicle is scrapped

Outside major developed urban areas..where is the charge stored

Africa, South America and Eurasia is a long long time in the planning

But I do agree, fewer moving parts and quiet traffic makes it look inviting

…another fear is environmental. If humanity is not going to find a solution to completely recycle old battery carcasses, and its chemical contents….our children may admire mountains of battery dumps. That we don’t want.

The CO2 cost of battery manufacturing needs to come down. We’re trading one kind of environmental disaster (oil) for another type.

You didn’t mention the outrageous import tax on EVs. They are classified along with golf carts, luxury items.

Forget Hydrogen. If you do the energy sums it’s just ridiculously non-viable.

Some other preferences will need to change, the top three cars by volume average around $33,000
Ford F series
Chevrolet Silverado
Dodge Ram

All three are oversized pickups

…the average American, I fear, will struggle to fit inside the cabins of A or B-segment vehicles. Plus you need strong suspension springs.

An American sitting in a Japanese “Kei” car, will look like an apple in a match box 😉

Good for them. In SA car inflation was 100% over the same time period as the article as the ZAR depreciated from 7 to 14. Also US fuel price is around half of ours but electricity is more expensive.

EV probably cheaper to run in SA (if you can get solar charging right) but taxes o
EVs skew the picture to such an extent you can’t draw any conclusions.

How much I like the concept of EVs, disappointingly with the latest increase in global oil prices north of $60pb…it laughs in the face of the impact what EVs have on global demand.

Here I sit, some months ago, wondering if the global oil price is going to recover to $40 pre-Covid levels.

My dream of “EV’s set to take over the world” now shattered.

If anything is taking over the world, it’s demand for oil.

The real issues unknwon to us in South Africa are : Lifespan of an electric motor km ; The maintenance costs over a priod of 160k km ; The warranties on the motor /engine . Till then , we cannot make a reasonable decision of a standard vehicle vs hybrid/electric. Producers should make these known to us.

While I agree that wind and solar are not really “green”, I believe that EV’s no longer need to be classified as green (which I don’t buy into) and need to be judged on their own merits. I am also focusing on Tesla who are years ahead of the competition.
Operating costs of EV’s are substantially lower than ICE (internal combustion engines). Current generation Tesla batteries will give over 2 million km of life and will outlast the life of the car with less than 10% loss of capacity. Batteries are almost 96% recyclable and Redwood Technologies has been established to recycle. Charging rates are rapidly increasing with Superchargers and improving battery management systems and given current trends you will be able to recharge 80% of battery capacity in fewer than 15 minutes. Currently that can be done in 30 minutes.
Battery technology is improving at a rapid rate and Tesla’s new 4680 battery will reduce cost /kWhr by over 50%. It’s not only the battery, but also improving energy usage in the vehicle, which is giving ever better range with all Tesla’s offering between 460 and 650 km of range.
Tesla is expanding its network of chargers at a phenomenal rate. What few people realise is that Tesla is also an energy company. It not only sells cars, but also the electric fuel to its customers. No other car company has that advantage. Plus their battery storage solution is growing rapidly and generating significant revenue and profit. This is constrained by battery supply, which will eventually expand to meet demand.
With respect to the pickup market in the US, Tesla’s upcoming Cybertruck will retail ($39000) for less than the comparative traditional ICE pickups. They already have about 1.5 million pre-orders for this vehicle, due to come into production at the end of this year.
Tesla’s Full Self Driving software is also going to revolutionise transport and will be a huge threat to Uber and other ride sharing companies.
EV’s will totally dominate vehicle sales in the first world within 5 to 8 years. Norway is already at 80% for all new car sales. The third world may well be relegated to surviving on the old ICE vehicles, much like Cuba had to do for a very long time.

Are EV vehicles safe – sitting centimeters above a massive battery – will the magnetic field and the radiation from the battery not affect the magnetic fields around human cells and so procreation?

Perhaps the electrical engineers can comment.

Three further things. The cost of electricity and battery and life span of batteries.

I don’t get it, why do some people automatically go anti EV and anti-renewables

I am on my second EV so have some facts rather than the fake news:

1. Battery life. EV have an 8y warranty for 80% of original capacity. So if today good for 300km, all fine till 2030’s for 240km. If it goes, grab that old one as a massive UPS repurposed. What is the economic value of an 8y old diesel or petrol engine??

2. Recharge. You can recharge (slowly but adequately) at home with a normal wall plug, or at hundreds of locations at three times the speed or at DC charge stations at 250kW. 300km in 15 minutes. In my book : EV should be city commuters. If I need to go to JHB I fly there and rent. I don’t drive to JHB from CPT in my other non-EV in any event, why on earth would I do that in my EV? Both need 4 days up and down and cost more than flying all in.

3. Renewables have worse carbon footprint. This logic astounds me. Is carbon footprint nonsense and if it is, is solar’s supposedly negative carbon footprint then relevant??? I believe carbon and smog do matter and if anybody will listen I can prove that solar panels cover their carbon imprint in under two years. They then continue for another (warranted) 23 years.

Not sure why I bother : it is like talking to a wall. Do you all own Sasol shares?

Indeed, some ultra conservatives, poorly informed, grossly misled stubborn cynics still are against renewables and electric cars, maybe mostly because it something they associate with leftist loonies and liberals. The poor suckers.
Renewables have simply become the cheapest option available.
Electric cars should be made cheaper by lowering the import duties or maybe even completely removing them. At the moment import duties for electric cars are 20% and 15% for ICE vehicles.
And govt should finally start moving with far more renewables in the country. Bidwindow 5 for REIPPs is at least 3 years overdue.
Electric cars make only complete sense when they get at least 50% of their charges from renewables.

Not much of a chance to recharge using our current electricity supply! And at what cost?
Our taxi industry will be the benchmark for change. I doubt the industry can change to EV anytime soon! And…we have just accepted Fords offer of manufacturing their redundant petrol engines here in SA…with open arms as if it’s a massive coup! What chance does Africa have to convert to renewables anytime soon? Zero in my opinion.

Mac : investors and smart business owners don’t do renewables because they hug bunnies or care about climate change. They do it because it has a good IRR.

If somebody made electric people carriers and I was a taxi owner I’d do it in a flash if the math made sense. I imagine a city minibus taxi prob drives too many km per day in double shifts. Prob 18h a day at average 40km/h so 700km is tough ask with 16 passengers.

But hell they’d be even scarier with that acceleration!

Its interesting where tech and new materials in batteries go as motor companies are investing heavily in battery tech in China it is very difficult to register a gas burner because of the frequent slogs in the cities and an electric version easily gotten.

Did you mean COAL fired electric vehicles?????????????????

Lol, I hate the comment but really, OK Boomers, this article and comments stink of people that have missed out on the ev boom and now attempt to drag evolution in the opposite direction.
Range anxiety? Oh please, even the most basic ev’s have surpassed what is needed for the masses and the high end vehicles have surpassed ICE ranges, not to even speak of driving performance , maintenance schedules, self driving capabilities, battery swops etc etc.
I guess the waiting lists at Nio, Tesla and the like must all be confused “greenies”
Next comment will probably that you cant live without the noise of a deep growling ice engine, hilarious

I still want to know why a simple electric motor with a rheostat costs so much more than a highly developed “mechanical” engine and sophisticated gearbox.
Looks to me like car makers are trying to save on development and manufacturing costs in order to fatten the profit margin, while hiding behind “do-good” propaganda.

End of comments.

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